Inherited IRA Rules: The 10-Year Withdrawal Trap
Who has to follow which rule
| Beneficiary type | Withdrawal rule |
|---|---|
| Surviving spouse | Can treat the IRA as their own or stay a beneficiary — may stretch over their own life expectancy. Not subject to the 10-year rule. |
| Eligible designated beneficiary (minor child of owner, disabled/chronically ill, or heir not more than 10 years younger) | Exempt from the 10-year rule — may still stretch withdrawals over life expectancy. |
| Most non-spouse heirs (adult children, grandchildren, other relatives, friends) | Must empty the account by year 10. If the owner had already started RMDs, must also take annual withdrawals in years 1–9. |
Rules are general and depend on the owner's date of death, their RMD status, and the beneficiary's category. Confirm your specific situation before acting.
Why lump-summing in year 10 is often the worst move
It's tempting to leave the money untouched and pull it all out at the deadline. The problem: every dollar of a traditional inherited IRA is taxed as ordinary income in the year you withdraw it. Cramming ten years of withdrawals into one tax year can push a heir from the 22% bracket into the 32% or 35% bracket, trigger higher Medicare (IRMAA) premiums, and phase out other tax benefits. Spreading roughly equal withdrawals across all ten years keeps each year's income lower and usually results in a smaller total tax bill over the decade.
Coordinating with the heir's own income
The "right" pace isn't purely mathematical — it depends on what else is on your tax return. An heir who is still working in their peak earning years may want to take smaller withdrawals now and larger ones after they retire into a lower bracket. An heir already retired might front-load withdrawals in low-income years before Social Security and their own RMDs begin. The goal is to fill up the lower tax brackets each year without spilling into a higher one, all while still emptying the account by the deadline.
See your inherited IRA drawdown, year by year
Enter the balance, your other income, and your timeline — our free calculator shows the withdrawal schedule that spreads the tax hit and keeps you on pace for the 10-year deadline.
Plan my inherited IRA →Frequently asked questions
What is the inherited IRA 10-year rule?
Under the SECURE Act, most non-spouse heirs must withdraw the entire inherited IRA by December 31 of the 10th year after the owner's death. The old lifetime "stretch IRA" that let heirs spread withdrawals over their own life expectancy no longer applies to most beneficiaries.
Do I have to take annual withdrawals during the 10 years?
It depends on the owner's RMD status. If the original owner had already started required minimum distributions before death, most non-spouse heirs must take annual withdrawals in years 1–9 and empty the account by year 10. If the owner died before their RMD start age, no annual withdrawals are required — just the full balance by year 10.
Who is exempt from the 10-year rule?
Eligible designated beneficiaries can still stretch withdrawals over their life expectancy. This includes surviving spouses, minor children of the owner (until majority), disabled or chronically ill individuals, and beneficiaries not more than 10 years younger than the owner.
The Retirement Literacy Foundation is a 501(c)(3) non-profit. This guide is general financial education, not individualized investment, tax, or insurance advice. Rules are illustrative and change with legislation and IRS guidance, and depend on your personal situation. Consider speaking with a licensed professional before making decisions.